Government Legislation Update Aug. 2008

Only five months into 2007, we’ve
already seen a flurry of legislation pass
through Sacramento. Obviously the hottest
item on the agenda was SB670, the
Private Transfer Tax Prohibition bill.
Unfortunately, the bill was defeated in
the Senate Transportation and Housing
Committee even though C.A.R. added a
list of amendments to quell concerns of
some legislators. Another piece of legislation
that’s very important is SB464, which
is throwback to the Ellis Act. C.A.R.
strongly opposes it and urges all members
to call their senators and ask them to
oppose it.

For more information on legislative
issues, contact Anil Babbar, Government
Affairs Director, at anil@sccaor.com.

C.A.R. is the sponsor of AB
1356 (Houston) Agents of Equity
Purchasers, which was scheduled
to be heard by the Assembly Judiciary
Committee on April 24, and will be
rescheduled to be heard within the next
few weeks. Existing law effectively (and
inappropriately) precludes legitimate
agents from representing investor purchasers
of properties that are in foreclosure.
The prohibition is the inadvertent result
of requiring buyers’ agents to purchase
a bond for the sale of twice the value of
the property. These bonds are currently
not available. AB 1356 will allow agents
an alternative for demonstrating financial
responsibility through the proof of E&O
insurance, which is available. This measure
will make the financed responsibility
requirement of the Home Equity Sales Act
workable, and avoid artificial restrictions
on the ability of homeowners to salvage
their equity from foreclosure.

C.A.R. is the sponsor of
SB 226 (Negrete McLeod)
“Degree Broker” Education
Requirements, which was scheduled
to be heard by the Senate Appropriations
Committee on April 23, but was granted
passage without a hearing due to Senate
Joint Rule 28.8. SB 226 will next be eligible
to be heard on the Senate Floor.
Existing law requires most applicants for
a brokers license, in addition to exam passage,
to demonstrate a valid salespersons
license and two years experience in general
real estate. Current law also provides that
the Real Estate Commissioner may grant a
license to an applicant without real estate
experience who has a degree from a 4-year
college or university with a “specialization
in real estate.” SB 223 will clarify that rule
to require that the degree have a major or
minor in real estate before the applicant
could be granted an experience exemption.
This bill will not change the other mechanisms
for demonstrating equivalency such
as a petition by a licensee from another
state for recognition of his or her experience.

C.A.R. supports SB 303
(Ducheny) Housing Affordability
Act of 2007, which passed the Senate
Environmental Quality Committee on
April 23. SB 303 proposes to require each
city’s and county’s general plan to have a
planning period of at least 20 years, and
would require it to be updated every 10
years, with the exception of the housing
element portion which would continue to
be updated every 5 years. It also requires
local governments to zone enough land to
accommodate a 10-year housing need, and
to certify that the land zoned for housing
is actually suitable for housing. SB 303
further requires that adopted zoning ordinances
be consistent with the jurisdiction’s
general plan. If a proposed project is consistent
with the general plan, zoning would
be subject to the Permit Streamlining Act
and cannot be denied except by a 4/5 vote
of the local agency. C.A.R. supports SB
303 because it seeks to encourage the supply
of housing and fosters more certainty
in, and streamlining of, the local government
housing planning process.

C.A.R. oppose SB 464 (Kuehl)
Required Operating Time for
Privately Owned Rental Property,
which was scheduled to be heard by the
Senate Appropriations Committee on
April 23, but was granted passage without
a hearing due to Senate Joint Rule 28.8.
This bill has been eligible to be heard on
the Senate Floor since April 26. Existing
law prohibits any public entity from taking
any action that would force owners of
residential rental property to continue to
offer their property for rent or lease. SB
464 would grant local governments the
authority to require landlords of all rental
property, including single family dwellings,
to stay in the rental business for a
minimum of 5 years after the purchase of
that rental property. This bill, if passed,
will only apply to properties purchased on
or after March 27, 2007. Furthermore, SB
464 requires that landlords give all tenants
a one year notice of termination of tenancy
if a single disabled or senior citizen that
is 62 years of age or older resides within
their rental units. C.A.R. opposes SB 464
because it discourages investment in rental
housing by placing a substantial limitation
on a property owner’s right to legitimately
go out of business. If passed, this measure
will negatively impact property values,
selling prices and hinder investors’ ability
to obtain loans on rental property. Finally,
this measure creates a biased standard
against rental property owners because
the legislature does not demand any other
business to operate for 5 years when they
open for business.

C.A.R. supports SB 984
(Ashburn) Homeowners’ Property
Tax Exemption Increase, which was
heard by the Senate Revenue and Taxation
Committee on April 25, and was placed
on the committee’s suspense file. Existing
law allows a person who is over 55 years
of age or severely disabled to transfer
the base year value of their property to a
replacement dwelling of equal or lesser
value if that property is located within the
same county as the original property, and
is purchased or newly constructed within
2 years of the sale of the original property.
A replacement dwelling purchased under
this provision may not exceed 105% or
110% of the full cash value of the original
property during the first and second year,
respectively, after the sale of the original
property. SB 984 would instead give
counties the option of using changes in
the Housing Price Index for California to
determine if the replacement dwelling is
of equal or lesser value then the original
home. C.A.R. supports this bill because the
use of the Housing Price Index will more
accurately reflect the increased cost of
purchasing or constructing a replacement
dwelling.

C.A.R. opposes unless amended
AB 1574 (Houston) Real Estate
Transfer Fees, which is scheduled
to be heard in the Assembly Judiciary
Committee on May 1. AB 1574 provides
that all privately imposed transfer fee’s
imposed on real property after December
31, 2007, would be void unless the fee
satisfies one of the following requirements:
(1) that the fee serves a regional benefit;
(2) that the fee provides a benefit to the
real property where the fee is imposed; or
(3) the fee is a payment that is required
under conditions that serve to discourage
speculative purchases. The disclosure statement
required by this bill would identify
the amount of the fee or a description of
how the fee is calculated, the group to
which funds from the fee will be paid,
and the general purpose for the use of the
funds. C.A.R. will oppose AB 1574 unless
it is amended to reflect the principles and
concepts provided in SB 670, which is
sponsored by C.A.R.